Repossession rates plummet but remain high in the north
The number of UK homes being repossessed has fallen to its lowest level since 2006, according to the Council of Mortgage Lenders.In the north of England, however, rates still remain high despite the reduction.
Fewer households have fallen into mortgage arrears as cheaper deals and low interest rates surge the market and help cushion more people against getting into major financial trouble.In the last twelve months, approximately 21,000 homes in the UK have been repossessed, a figure 26 per cent lower than in the same period in 2013/14.
Out of the 21,000 repossessions in the past twelve months, 16,100 (76 per cent) were on owner-occupied homes and 4,900 (24 per cent) on buy-to-let properties.Yet it is the north of England which is contributing the greatest number of repossessions.
It is the fear of mortgage brokers that the thousands of home-owners still being repossessed will only multiply when interest rates begin to rise again.Those too who are only just avoiding repossession may find themselves teetering on a knife edge and could find themselves being pushed over at any moment.
However, it might be in fact an unfair portrayal to use these figures as they only represent repossessions dealt with by mainstream lenders and high street banks.Bridging Lenders such as Preston-based Mayfair Bridging are enjoying even lower rates of repossession as demand for short term loans continues to increase within the property market.
“Our exceptionally low rate of repossessions is due to the strength of our underwriting,” commented Shoaib Bux, divisional director at Mayfair Bridging.“We assess the exit plan in detail and some cases also ask for a contingency. Mayfair Bridging continues also to enjoy all time low default rates as a result of our team’s hard work.”
Repossession is always a last resort for any lender and strict guidelines and rules are in place to ensure lenders assess a customer’s affordability correctly on regulated contracts.This is so no one is lured into a false sense of security about how much exactly they are able to borrow, especially in consideration of future interest rates.
With bridging lenders such as Mayfair Bridging offering an alternative and much quicker method of borrowing compared to mainstream lenders, the property market is certainly regaining the growth lost during the credit crunch.It is expected by the Bank of England that any subsequent change in terms of repossession rates, whether they rise or fall even further, will be limited and at a graduate pace.
Interest rates will inevitably rise again, but a one-time adjustment approach will prove to be good news for British households.
The Bank of England has subsequently announced plans to lower interest rates even further under the new £375bn quantitative easing programme should low inflation persist longer than anticipated.